The Status and Role of Cooperatives and Cooperative Bank of Oromia in the Socio-Economic Development in Ethiopia

Abstract

Cooperative is a useful instrument to alleviate the socio-economic problems of the people in many developing countries including Ethiopia. Cooperation among people has existed since time immemorial. However, formal cooperatives began in Ethiopia in 1960. Following this, with the initiative of the government to encourage financial institutions, Cooperative Bank of Oromia was emerged in 2004. Since its establishment, Cooperative Bank of Oromia played its share to solve the bottleneck of institutions and individuals in delivering both financial and non-financial services to the unbanked and under banked communities as well as to sustain the co-operative institutions. The objective of this review article is to show the status and role of cooperatives and Cooperative Bank of Oromia in the socio-economic development in Ethiopia.  Intensive conceptual and empirical literature reviews were made in the areas of cooperative development, cooperative policy and regulatory framework documents, annual reports of Cooperative Bank of Oromia and the Federal Cooperative Agency’s report. The study indicated that the number of primary cooperatives has increased from 7,366 in 1991 to 82,089 at the beginning of 2019 showing 1,014% rate of growth. The number of members increased from 4.5million to 18 million during the same period demonstrating growth rate of 297%.  Their capital was increased from half billion to 20.5 billion birr during the stated periods. Likewise, Cooperative Bank of Oromia has shown dramatic progress. Its capital is increased from 300 million to more than 5 billion; the numbers of branches increased from 7 to 420, number of employees are 8,163. The review confirmed that the bank is contributing multi-directional socio-economic development in the country. It is obvious that if it continues in this manner, the bank will be one of the leading banking industries in the country.

Keywords: Cooperatives, Cooperative Bank of Oromia, Role, Status, Socio-Economic Contribution

DOI: 10.7176/EJBM/13-7-02

Publication date: April 30^th 2021